People in the north of the county say they are having to take far more new houses than the south.
About 400 people walk between the Devon villages in support of a campaign to get a road repaired.
Residents say the news is a "massive relief" locally after winter storms damaged the area's sea defences.
South Devon MP Caroline Voaden says the funding is "really great news" for the area.
A university professor says the change at Torcross means "waves won't slam directly" into a seawall.
One man says he acted out of fear for his family while the other insists he had been misled.
An MP says there are "no promises" the route will be repaired after a section broke up and washed away.
Residents are suffering after parts of the Slapton Line washed away, the county council boss says.
The partly collapsed A379 Slapton Line will not be fixed in the short term, a public meeting hears.
